INTRODUCTION

Ratio Analysis

Ratio analysis is the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet and profit & loss account.
Management should be particularly interested in knowing financial strengths and weakness of the firm to make
their best use and to be able to spot out financial weakness of the firm to take their suitable corrective actions.

Ratio analysis is the starting point for making plans, before using any sophisticated forecasting ad
planning procedures.

Nature of Ratio Analysis

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated quotient of
two mathematical expressions” and as “The relationship between two or more things”.

A ratio is used as a benchmark for evaluating the financial position and performance of a firm. The
relationship between two accounting figures, expressed mathematically, is known as a financial ratio.

Ratio analysis helps to summaries large quantities of financial data and to make qualitative judgment
about the firm’s financial performance. The persons interested in the analysis of financial statements can be
grouped under three heads owners or investors who are desire primarily a basis for estimating earning capacity.
Creditors who are concerned primarily with liquidity and ability to pay interest and redeem loan within a
specified period. Management is interested in evolving analytical tools the will measure costs, efficiency,
liquidity and profitability with a view to make intelligent decisions.

Objectives of Ratio Analysis

Analysis of financial statements may be made for a particular purpose in view

 To find out the financial stability and soundness of the business enterprise.
 To assess and evaluate the earning capacity of the business
 To estimate and evaluate the fixed assets, stock etc., of the concern
 To estimate and determine the possibilities of future growth of business
 To assess and evaluate the firm’s capacity and ability to repay short and long term loans.

Users of Financial Analysis

 Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet and profit & loss account. The
information contained it these statements are used by management, investors, creditors, suppliers and others to
know the operating performance and financial position of firm.

 Management of the firm would be interested in every aspect of the financial analysis. It is their overall
responsibility to see that the resources of the firm are used most effectively, and that the firm’s financial
condition is sound.

 Investors who have invested their money in the firm’s shares, are most concerned about the firm’s
earnings. They restore more confidence in those firm’s that shows steady growth in earnings. As such,
they concentrate on the analysis of the firm’s present and future profitability. They also interested in the
firm’s financial structure to the extent it influence the firm’s ability and risk.

 Trade Creditors are interested in firm’s ability to meet their claims over a very short period of time.
Their analysis will therefore confine to the evaluation of the firm’s liquidity position.

 Suppliers Of Long – Term Debt are concerned with firm’s long-term solvency and survival. They
analysis the firm’s profitability overtime. Its ability to generate cash to be able to pay interest and repay
principal and the relationship between various sources of funds.

Definition

“The indicated quotient of two mathematical expression”and as “the relationship between two numbers”.
 Accountant’s handbook by Wixon, kell and Bedford, a ratio “is an expression of the quantitative
relationship between two numbers”.

People use ratios to determine those financial characteristics of the firm in which they are interested.

With the help of ratio one can determine

 The ability of the firm to meet its current obligations

 To extent to which the firm used its long term solvency by borrowings funds

 The efficiency with which the firm is utilizing its assets in generating sales revenue

 The overall operating efficiency and performance of the firm.

However Ratio analysis is not end itself. It is only a measure of better understanding of financial

strengths and weakness of a firm

COMPANY PROFILE

Amara Raja Batteries Limited (ARBL) incorporated under the company’s act, 1956 in 13 th February
1985, and converted into Public Limited Company on 6th September 1990.
 The Chairman of the company is “Sri Galla Ramachandra Naidu”. ARBL is the first company in India,
which manufactures Valve Regulated Lead Acid (VRLA) Batteries. The main objective of the company is
manufacturing of goods quality of “Sealed Maintenance Free” (SMF) acid batteries. The company started its
plant in 185 acres in Karakambadi Village, ReniguntaMandal. The project site is notified under “B” category.

The company has the clear-cut policy of direct selling without any intermediate. So they have set up
more than 22 branches and are operated by corporate operations office located at Hyderabad. The company has
virtual monopoly in higher A.H. (Amp Hour) rating market is product VRLA. It is also having the facility for
industrial and automotive batteries.

Collaborators:

Amara Raja Batteries Limited has a strategic tie up with “Johnson Controls Inc.” of U.S.A. who owns
26% stake in this company, Is the largest manufacturer of lead acid batteries in North America.

The main objective of the company is manufacturing of good quality of “Sealed Maintenance Free” acid
batteries (SMF).

The present turnover of the company is in FY 2015-16 was Rs.52,417.61 Millions

Amara Raja has always offered time tested world class Technology and Process developed on
international standards. High integrity VRLA systems like power stack and power plus or the recently launched
high performance UPS Battery-KOMBAT and AMARON hi-life automotive batteries are the products of the
collaborative battery efforts of engineering at Johnson controls Inc. and Amara Raja.

AMARON launched in January 2000, Amara Raja has pioneered the introduction of hi-cube automotive
batteries in India. This zero maintenance product uses the revolutionary patented silver X technology developed
by Johnson controls for high environments and Incorporates may superior features that make it the most
advantage battery on roads anywhere in the world.

Competitors:

The major competitors’ for Amara Raja Batteries products are:

 Exide Industries Ltd.

 Hyderabad Batteries Ltd.

  GNB Industries (US based).

Customers:

ARBL has prestigious original equipment Manufacture clients like ford, general motors, Daewoo
motors, Mercedes-Benz, Daimler Crysler, MaruthiUdyog Ltd, premier auto ltd, Ashok Leyland, and
Hindustan motors, Telco, Mahindra & Mahindra and Swaraj Mazda. The company entered the
replacement battery segment with the launch of Amaron Hi-life auto batteries.

PRODUCTS:

1. AMARON HI-WAY (TRUCKS)

2. AMARON HARVEST (TRACTORS)

3. AMARON SHIELD (INVERTERS)

4. AMARON HIGH LIFE (PASSENGER CARS) etc.

Organization Structure: ARBL

CHAIRMAN

Managing
Director

Directors
Policies Implemented by the Amara Raja Group:

 Material Policy: (2002)

To achieve customer satisfaction through collective commitment of our employees in design,

Manufacture and Marketing of Batteries, Power Systems and related Services.

To accomplish the above, the company focused on

 Outstanding Delivery Performance.

  Exceptional customer Satisfaction.

 Continuously improving manufacturing flexibility.

 Energy Policy:(2003)

Amara Raja was serving continuously to conserve energy in all its activities relating to design and
manufacturing of Batteries, Power systems, allied products and services and committed to save National
Resources.

To accomplish the above, the company focused on

 Creating Awareness among all the employees.

 Planning for optimum utilization of Plant & Machinery.

 Selection of Energy Efficient Equipment.

 Measure, monitor, Analyze and Report on periodic basis for continual improvement.

 Occupational Health and Safety (OHS) Policy: (2004)

Amara Raja was committed to provide good health and safe working environment to all its employees,
contractors and other interested parties by reducing OHS risks in all its activities.

To accomplish the above, the company focused on

 Comply with the current applicable OHS legislation and other requirements.

 Adopt programmers for reducing OHS risks and improving health and safety of employees and
other interested parties.

 Ensure continual improvement in OHS performance through effective implementation of OHS

Management System.

 5 S Policy: (2004)

A Systematic and Rational approach to work place organization and Methodical housekeeping with a
sense of purpose, consisting of the following 5 elements.

1. SEIRI – Sorting Out

2. SEITON – Systematic Arrangement

3. SEISO – Spic and Span

 4. SEIKETSU – Serene Atmosphere / Sanitizing

5. SHITSUKE – Self Discipline

To accomplish the above, the company focused on

 Training and creating Awareness of 5 S.

 Motivating and changing Behavior Pattern of employees.

 Establishing Standards / procedures for the implementation of each element of 5S.

Environment Policy: (2005)

As a good corporate citizen, people at Amara Raja are committed to enrich the Quality of life of their
employees, Customers and Community at large by minimizing impacts on environment in all their activities
relating to design, Manufacturing and marketing of Batteries, Power systems and allied products.

To accomplish the above, the company focused on

Comply with applicable legal and other requirements.

 Ensure continual improvement in environmental program through effective environmental

management system.

 Quality Policy: (2006)

Amara Raja wants to exceed their customer expectations through a collective commitment to design,
Manufacturing and Marketing of Batteries, Power Systems and related Services.

To accomplish the above, the company focused on

 Contemporary Technologies, Robust Design Principles and Innovation.

 Continuous Enhancement of our individual Engagement, Development and Performance.

Awards and Rewards:

 Industrial Economist Business Excellence Award – 1991 by the Industrial Economist, Chennai.

 Best Entrepreneur of the Year 1998 – by Hyderabad Management Association

 Excellence award by institution of Economic Studies, New Delhi.

 Udyog Rattan – 1999 by Institution of Economic Studies, New Delhi.

  Automotive Product of the Year 2000 by Overdrive.

 Excellence in Environmental Management in 2002 by Govt of A.P.

 Creative Advertiser of the Year 2002 by ABBY.

 Q1 Vendor Status by Ford India Ltd – 2003

 World Excellence Silver Award by Ford – USA.

 ARBL Engineers nominated for JCI Chairman’s Award in 2004 for vent plug design.

 ARBL Engineers & marketing staff nominated for JCI Chairman’s award in2005 for Yellow Hat.

 Chairman was awarded ‘EY Entrepreneur of the Year 2015 ‘,In manufacturing Sector

 Best CEO Award for the Auto Ancillary Category for the Year 2015

Charitable Work:

 Rajanna Trust, works on providing accessible water supplies to villages.

Difference Between olden days batteries and now a days batteries

Batteries in old days Batteries now a days

Before it is used to be filed with sulphuric acid Now no need to fill sulphuric acid
Separated with plastic material before inside Now separated with thin glass material
the batteries
Leakage problem Now no leakage problem

Indications of colors of dress code at amararaja

Particulars Element Mind State

Innovation Space Synthesizing

Excellence Wind Disciplined

Entrepreneurship Fire Creative

Experiences Water Spiritual

Responsibility Earth Respectful

Amara Raja Group of Companies

  Amara Raja Batteries Ltd

 Amara Raja Power Systems Ltd

 Amara Raja Electronics Ltd

 Mangal Industries Ltd

 Amara Raja Infra (p) Ltd

 Amaron Batteries (p) Ltd

 Amara Raja Industrial Services (p) Ltd

Amara Raja Batteries Ltd (ARBL):

 Amara Raja Batteries Limited (ARBL) Company was established on 13 th February 1985, and
converted into public limited company on 6th September 1990.

 ARBL is the first company in India to manufacture VRLA (Value Regulated Lead Acid)
Batteries.

 Amara Raja Batteries Limited owns the hugely popular “Amaron” brand

 In collaboration with Johnson controls Inc. ARBL has become the largest manufacturer of VRLA
Batteries in the Indian Ocean Rim.

Amara Raja Electronics Ltd (AREL):

AREL carries the following operations:

  PCB Assembly (Through hole and SMT)

 Electronic products Assembly and Testing

 Currently manufacturing Battery chargers, Digital inverters and trickle charges

Mangal Industries Limited (MIL):

 MIL is situated at Petamitta in Chittoor district, AP.

 Its operations consist of Fabrication of advanced sheet metal products and fasteners, plastic
component and compounds.

Mangal Industries Limited (Galla Food Division).

 Galla food division was inaugurated on 4th May, 2005 at Chittoor, in AP with an investment of
US$ 4.6 million.

 It is a 100% Export Oriented Unit.

Social Responsibilities:

A Company is known by the Society it keeps.

Amara Raja believes in taking responsibility for whatever they do, within and outside the company.

Vision:

“ Through the Amara Raja way and through enduring progressive partnerships we will be a global leader in
batteries and battery technologies and dominant player in the Indian Ocean Rim”

Core Purpose :

“To transform our increasing spheres influence and to improve the quality of life by building institutions that
provide better access to better opportunities,goods and services to more people …..all the time”

Amara Raja Group committed themselves to social activities in the following four areas:
  Education

 Infrastructure

 Village Development

 Environment

Education:

To ensure people have a better quality of life, Amara Raja provides primary schooling facilities for the
children of their employees. They also provide their employees with the facilities in the form of free
memberships to education enhancement trusts and organizations like the library for employees on site, the
Rajanna trust for intellectual enhancement.

Infrastructure:

Some of the infrastructural requirements provided are Bank for employees and the public, Residential
complexes for employees, Medical facilities, post-office, Subsidized transportation and Recreational clubs.

Village Development:

India lives in her villages. That is why Amara Raja Group focused a great deal on developing the same
by helping in building on roads, street lighting, rainwater storage, plants and check dams. Under the banner of
‘GrameenaVikasam’ Amara Raja invested time and resources on all the ongoing and long-term initiatives

Environment:

Respect for environment is a core business value that is reflected in all the comprehensive, proactive
environment programmers like the development of green belts, energy conservation and water harvesting, to
name a few.

BOARD OF DIRECTORS

Non-Executive Chairman Dr. Ramachandra Naidu Galla

ManagingDirector&Vice Mr. Jayadev Galla

Chairman
 Director Mr.Bruce Arden Ronning Jr

Director Mr. Raphael John Shemanski

Director Mr. Nagarjun Valluripalli

Director Mr.N Sri Vishnu Raju

Director Mr T R Narayanaswamy

Director Mr Raymond J Brown

Director Ms Bhairavi Tushar Jain

PRODUCT PROFILE

Amara Raja's Amaron Sleek is a high performance battery designed to meet the demands of a wide range of
industrial applications. The Amaron Sleek range is modular in structure and is capable of accommodating a
wide spectrum of capacities depending on the application. Major application areas include Telecommunications,
Power Utilities, Railways, Defense and other heavy Industries.

Amaron Quanta is not just another UPS battery; it is a UPS battery with a back-up for a back-up. What does this
mean? Well, our UPS battery is further backed by the world-renowned technology that others cannot provide
you with. Put simply, Amaron Quanta is the product of fail-safe, fool-proof battery technology, produced and
tested in our premier manufacturing facility and provides several firsts for a battery of its kind.

Amara Raja's Amaron Volt is a high performance battery designed to meet the demands of a wide range of
industrial applications. The Amaron Volt range is modular in structure and is capable of accommodating a wide
spectrum of capacities depending on the application. Major application areas include Telecommunications,
Power Utilities, Railways, Defence and other heavy Industries.
Amara Raja's Power stack is a high performance battery designed to meet the demands of a wide range of
industrial applications. The Power stack range is modular in structure and is capable of accommodating a wide
spectrum of capacities depending on the application. Major application areas include Telecommunications,
Power Utilities, Railways, Defence and other heavy Industries.

Amaron PRO, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-by
VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc., USA; the global leader in
Interior experience, building efficiency and power solutions.

Amaron FLO, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-by
VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc., USA; the global leader in
Interior experience, building efficiency and power solutions.
Amaron GO, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-by
VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc., USA; the global leader in
Interior experience, building efficiency and power solutions.

Amaron Black, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-by
VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc. USA; the global leader in
Interior experience, building efficiency and power solutions.

Amaron Fresh, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-by
VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc. USA; the global leader in
Interior experience, building efficiency and power solutions.

AmaronR Hi-way truck batteries, brought to you by Amara Raja Batteries Limited (ARBL), the largest
manufacturers of Stand-by VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc. USA;
the global leader in Interior experience, building efficiency and power solutions.

Amaron Harvest, brought to you by Amara Raja Batteries Limited (ARBL), the largest manufacturers of Stand-
by VRLA Industrial Batteries in the Indian Ocean Rim and Johnson Controls Inc., USA; the global leader in
Interior experience, building efficiency and power solutions.

The new Amaron Shield, with an unheard of 24 months warranty. A product of Amara Raja Batteries Ltd.
(ABRL), Amaron Shield is a result of a partnership between the Amara Raja Group and Johnson Controls Inc.
USA, the global leader in Interior experience, building efficiency and power solutions.

Welcome to the elite club of Amaron Pro Bike Rider. Witness here the most researched, designed & developed
Power Fitments for today’s motorcycles that drive your passion. Yes, we bring to you Pro Bike Rider range of
Zero Maintenance batteries. Our specialist team has built these Power Fitments based on a unique and
unmatched breakthrough VRLA (Valve Regulated Lead Acid) technology most superior in its class for biking
needs of a customer like you.
OBJECTIVES OF THE STUDY

 To study the Liquidity position of the ARBL

 To study the long term solvency position of ARBL

 To determine the Profitability position of ARBL

 To study the growth and development of ARBL

 To suggest feasible solution to improve the overall efficiency of the ARBL

NEEDS OF THE STUDY

 To understand the financial performance of company

 To have a proper glance of comparison of financial items
 To Know the Credit worthiness of company
 To Understand Funds management of company
 SCOPE OF THE STUDY

 This project is as a reference guide or as a source of information. It gives the idea about the financial
analysis of a firm.

 The study aims to study the liquidity position of the firm. Ratio analysis has been used to analysis the
financial position of a firm.

 It deals with analysis an interpretation of data collected through the sources primary and secondary data
graphs and diagrams and tabulation method are used to analyse and interpret the data collected
 RESEARCH METHODOLOGY

The main aim of the study is to know the financial performance of the Amara Raja Batteries Limited, Tirupati,
and Chittoor Dist.

Research

Any effort, which is directed to study of the strategy, needed to identify the problem and selecting of
best solutions for better results is known as research

Research Design

The descriptive form of research method is adopted for the study. The nature and characteristics of the
financial statements of Amara Raja Batteries Limited have been described in this study.

Financial tool applied for the study

The financial statements may be made simpler for any reader to understand the operating results and
financial health of business. The technique of financial analysis applied is “RATIO ANALYSIS”

Methodology of the study

The analysis and interpretation of financial statements of Amara Raja Batteries Limited, Could be done
with the help of Balance sheets and Profit & Loss accounts of Amara Raja Batteries Limited

Methods of Data collection

The required data has been collected from secondary and primary sources of information.
Primary data

Primary data were collected from the financial controller and accounts manager by the personal discussion with
them.Secondary data

Secondary data is collected from the

 Company’s Annual reports

 Books

 Web sites

LIMITATIONS OF THE STUDY

The following are the limitations of the study

 Due to the lack of time research was done only for two months

 Ratios are generally calculated from past financial statements and they are not indicators for the
future.

 Since financial matters are sensitive in nature, they could not be acquired easily.
 REVIEW OF LITERATURE

Ratio Analysis

Introduction

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet and profit & loss account.
Management should be particularly interested in knowing financial strengths and weakness of the firm to make
their best use and to be able to spot out financial weakness of the firm to take their suitable corrective actions.

Financial analysis is the starting point for making plans, before using any sophisticated forecasting ad
planning procedures.

Nature of Ratio Analysis

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated quotient of
two mathematical expressions” and as “The relationship between two or more things”. A ratio is used as a
benchmark for evaluating the financial position and performance of a firm. The relationship between two
accounting figures, expressed mathematically, is known as a financial ratio. Ratio analysis helps to summaries
large quantities of financial data and to make qualitative judgment about the firm’s financial performance.

The persons interested in the analysis of financial statements can be grouped under three heads owners
or investors who are desire primarily a basis for estimating earning capacity. Creditors who are concerned
primarily with liquidity and ability to pay interest and redeem loan within a specified period. Management is
interested in evolving analytical tools the will measure costs, efficiency, liquidity and profitability with a view
to make intelligent decisions.
Standards of Comparison

The Ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio is
itself does not indicate favorable or unfavorable condition.It should be compared with some standard. Standards
of comparison are

1. Historical
2. Horizontal
3. Budgeted
4. Absolute
Historical:

Ratios calculated from the past financial statements of the same firm.

Horizontal:

Ratios of some selected firms, especially the most progressive and successful competitor, at the same
point of time.

Budgeted:

The budgeted standard is arrived at after preparing the budget for a period ratios developed from actual
performance are compared to the planed ratios in the budget to examine the degree of accomplishment to the
anticipated targets of the firms

Absolute:

Absolute standards are those, which become generally recognized as being desirable regardless of the
type of the company, the time ,stage of business cycle or the objectives of the analyst

Objectives of Ratio Analysis

Analysis of financial statements may be made for a particular purpose in view

  To find out the financial stability and soundness of the business enterprise.
 To assess and evaluate the earning capacity of the business
 To estimate and evaluate the fixed assets, stock etc., of the concern
 To estimate and determine the possibilities of future growth of business
 To assess and evaluate the firm’s capacity and ability to repay short and
Long-term loans.

Users of Financial Analysis

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet and profit & loss account. The
information contained it these statements are used by management, investors, creditors, suppliers and others to
know the operating performance and financial position of firm.

 Management of the firm would be interested in every aspect of the financial analysis. It is their overall
responsibility to see that the resources of the firm are used most effectively, and that the firm’s financial
condition is sound.

 Investors, who have invested their money in the firm’s shares, are most concerned about the firm’s
earnings. They restore more confidence in those Firms that shows steady growth in earnings. As such, they
concentrate on the analysis of the firm’s present and future profitability. They also interested in the firm’s
financial structure to the extent it influence the firm’s ability and risk.

 Trade Creditors are interested in firm’s ability to meet their claims over a very short period of time.
Their analysis will therefore confine to the evaluation of the firm’s liquidity position.

 Suppliers of Long – Term Debt are concerned with firm’s long-term solvency and survival. They analysis
the firm’s profitability overtime. Its ability to generate cash to be able to pay interest and repay
principal and the relationship between various sources of funds.
Ratio Analysis

The Ratio analysis is the most powerful tool of the financial analysis. As stated in the beginning, many diverse
groups of people are interested in analyzing the financial information to indicate the operating and financial
efficiency, and growth of the firm. These people use ratios to determine those financial characteristics of the
firm in which they are interested.

With the help of ratios one can determine

 The ability of the firm to meet its current obligations.

 The extent to which the firm has used its long-term solvency by borrowing funds.

 The efficiency with which the firm is utilizing its assets in generating sales revenue

 The overall operating efficiency and performance of the fir

Types of Ratios

Several ratios, calculated from accounting data, can be grouped into various classes according to
financial activity or function to be evaluated.

As started earlier. The parties interested in financial analysis are short term and long-term creditors,
owners and management. Short-term creditor’s main interest is the liquidity position or the short-term solvency
of the firm. Owners concentrate on the firm’s profitability and financial condition. Management is interested in
evaluating every aspect of the firm’s performance.

In view of the requirement various users of ratios, the ratios classified into the following four important
categories.
A. LIQUIDITY RATIOS

1. Current Ratio

The current ratio is an acceptable measure of the firm’s short term solvency. Current assets include cash
within a year, such as marketable securities, debtors and inventories. Prepaid expenses are also included in the
current assets as they represent the payments that will not be made by the firm in the future. All the obligations
maturing with in year are included in current liabilities. Current liabilities include creditors, bills payable,
accrued expenses, short-term bank loan, income-tax liability and long-term debt maturing in the current year.

The current ratio is a measure of the firm’s short-term solvency. It indicates the availability of current
assets in rupees for every one rupee of current liability. A current ratio of 2:1 is considered satisfactory. The
higher current ratio, the greater the margin of safety; the large the amount of current assets in relation to current
liabilities, the more the firm’s ability to meet its obligations. It is a crude-and-quick measure of the firm’s
liquidity.

Current Assets

Current Ratio = ----------------------------------

Current Liabilities

2. Quick Ratio

Quick ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is
liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most
liquid asset, other assets that are considered to be relatively liquid asset and included in quick assets are debtors,
bills receivables and marketable securities. Inventories are considered to be less liquid. Inventories normally
require some time for realizing into cash. The quick ratio is found out by dividing quick assets by current
liabilities. Generally a quick ratio of 1:1 is considered adequate.
 Quick Assets

Quick Ratio = -----------------------------

Current Liabilities

3. Cash Ratio

Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its equivalent current
liabilities. Cash and Bank balances and short-term marketable securities are the most liquid assets of a firm.
Trade investment or marketable securities is equivalent of cash; therefore, they may be included in the
computation of cash ratio.

If the company carries a small amount of cash, there is nothing to be worried about the lack of cash it the
company has reserves borrowing power. Cash ratio is perhaps the most stringent measure of liquidity. Cash
Ratio is calculated as cash and marketable securities by current liabilities.

Cash + Marketable Securities

Cash Ratio = ---------------------------------------------

Current Liabilities

B. LEVERAGE RATIOS

1. Debt Ratio

Several debt ratios may use to analyze the long-term solvency of a firm. The firm may be interested in
knowing the proportion of the interest-bearing debt in the capital structure. It may, therefore, compute debt ratio
by dividing total debt by capital employed on net assets. Total debt will include short and long-term borrowings
from financial institutions, debentures/bonds, deferred payment arrangements for buying equipment’s, bank
borrowings, public deposits and any other interest-bearing loan. Capital employed will include total debt and net
worth.
 Total Debt

Debt Ratio = ----------------------------

Total Debt + Net Worth

A high ratio means that claims of creditors are greater than those of owner. A high level
of debt introduces inflexibility in the firm’s operations due to the increasing interference and pressure from
creditors.

2. Debt Equity Ratio

Debt equity ratio indicates the relationship describing the lenders contribution for each rupee of the
owner’s contribution is called debt-equity ratio. Debt equity ratio is directly computed by dividing total debt by
net worth. Lower debt–equity ratio, higher the degree of protection. A debt-equity ratio of 2:1 is considered
ideal.

Total Debt

Debt-Equity Ratio = ------------------------

Net Worth

3. Interest Coverage Ratio

The interest coverage ratio or the times-interest-earned is used to test the firm’s debt-servicing capacity.
The interest coverage ratio is computed by dividing earnings before interest and taxes (EBIT) by interest
charges. In this the lender will be interested in finding out whether the business would earn sufficient profits to
pay the interest charges.

EBIT

Interest Coverage Ratio = -----------------------

Interest
4. Proprietary Ratio

The total shareholder’s fund is compared with the total tangible assets of the company. This ratio
indicates the general financial strength of concern. It is a test of the soundness of financial structure of the
concern. The ratio is of great significance to creditors since it enables them to find out the proportion of
shareholders’ funds in the total investment of business.

Shareholder’s Funds

Proprietary Ratio = --------------------------------

Total Assets

C. ACTIVITY RATIOS

1. Working Capital Turnover Ratio

This ratio measures the relationship between working capital and sales. The ratio shows the number of
times the working capital results in sales. Working capital as usual is the excess of current assets over current
liabilities. The following formula is used to measure the ratio

Net Sales

Working Capital Turnover Ratio = ----------------------------

Working Capital

2. Current Assets Turnover Ratio

This ratio is calculated by dividing sales into current assets. This ratio expressed the number of times
current assets are being turnover in stated period. This ratio shows how well the current assets are being used in
business. The higher ratio is showing that better utilization of the current assets another a low ratio indicated
that current assets are not being effectively utilized.
 Net Sales

Current Assets Turnover Ratio = --------------------------

Current Assets

3. Fixed Assets Turnover Ratio

The firm may wish to know its efficiency of utilizing fixed assets and current assets separately. The use of
depreciated value of fixed assets in computing the fixed assets turnover may render comparison of firm's performance
over period or with other firms.The ratio is supposed to measure the efficiency with which fixed assets employed a high
ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient use of assets.

Net Sales

Fixed Assets Turnover Ratio = --------------------------------

Net Fixed Assets

4. Total Assets Turnover Ratio

This ratio expresses relationship between the amounts invested in the assets and resulting in terms of sales. This
is calculated by dividing the net sales by total sales. The higher ratio means better utilization and vice-versa. This ratio
shows the firm's ability in generating sales from all financial resources committed to total assets.

Net Sales

Total Assets Turnover Ratio = -------------------------

Total Assets

5. Debtors Turnover Ratio

 Debtors turnover ratio indicates the relationship between sales and average debtors. It is calculated by
dividing sales by average debtors. Higher turnover ratio indicated better performance and lower turnover ratio
indicated inefficiency. It includes debtors as well as the bills receivables.

Net Sales

Debtors Turnover Ratio = ---------------------------------

Average Debtors

6. Inventory Turnover Ratio

Inventory turnover ratio indicated the efficiency of firm in producing and selling its products. It is calculated by
dividing the cost of goods sold by average inventory. It measures how fast the inventory is moving through the firm and
generating sales.The Inventory turnover ratio reflects the efficiency of inventory management.

Cost of Goods Sold

Inventory Turnover Ratio = ----------------------------------

Average Inventory

Opening Stock + Closing Stock

Average Inventory = ----------------------------------------

D. PROFITABILITY RATIOS

1. Gross Profit Ratio

Gross profit ratio establishes the relationship between Gross profit and sales. It indicates the efficiency
of production or trading operation. A high gross profit ratio is a good management as it implies that cost of
production is relatively low.
 Gross Profit

Gross Profit Ratio = ------------------------------*100

Sales

2. Net Profit Ratio

Net profit ratio establishes the relationship between net profit and sales. It is determined by dividing the
net profit (after taxes) by net sales. It indicates the efficiency of the management in manufacturing, selling,
administrative and other activities of the firm.

Profit After Tax

Net Profit Ratio = ------------------------------------*100

Sales

3. Return On Investment

This ratio indicates the relationship between net profit after interest, tax and Investment. It is calculated
by dividing net profit after interest and tax by investment. Return on investment is very important for the
investor. The higher ratio will be better for the concern. This ratio is very important to the decision-making.

Net Profit After Interest & Tax

Return on Investment = ---------------------------------------------*100

Investments

4. Earning Per Share

Earning per share indicates whether the firm’s earning power on per has increased or not. Earning per
share simply show the profitability of the firm on a per share basis. It does not reflect how much is paid as
dividend and how much is retained in the business. But, a profitability index, it is valuable and widely used
ratio. It also helps in estimating the company’s capacity to pay dividend to its equity shareholders. It is
calculated by dividing the profit after taxes by the total number of equity shares.

Profit After Tax

Earning Per Share = --------------------------------------

Number of Equity Shares

5. Dividend Per Share

The net profit after taxes belongs to shareholders. But the income which they really receive is the
amount of earning s distributed as cash dividends. Therefore, a large number of present and potential investors
may be interested in DPS, rather than EPS. DPS is the earning distributed to ordinary shareholders dividends by
the number of shares.

Dividend

Dividend Per Share = ----------------------------------

Number of Shares

6. DividendPayout Ratio

It measures the relationship between the returns available to equity shareholders and the dividend paid to
them. It reveals what proportion of earnings per share has been used for paying dividend and what has been
retained for sloughing back. Low ratio indicated conservative dividend policy. If an investor seeks regular cash
returns he prefers to invest in a company in which it is a higher level.
 Dividend Per Share

Dividend Payout Ratio = ----------------------------------

Earning Per Share

DATA ANALYSIS & INTERPRETATION

A.LIQUIDIY RATIO

1. CURRENT RATIO

Current Assets
 Current Ratio = ----------------------------------

Current Liabilities

TABLE 1: Current Ratio

Year Current Assets Current Liabilities Current Ratio

2011-12 9,369,500,000 4,129,800,000 2.27

2012-13 12,568,520,000 5,761,930,000 2.18

2013-14 12,986,100,000 6,337,030,000 2.05

2014-15 12,694,580,000 5,314,230,000 2.39

2015-16 14,080,810,000 6,293,590,000 2.24

CHART 1: CURRENT RATIO

 Current Ratio
2.39
2.4
2.27
2.3 2.24
2.18
2.2
Ratio

2.1 2.05
Current
Ratio
2

1.9

1.8
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The standard ratio of Current ratio is 2:1 ,Whereas as per above analysis the company is maintaining more than
standard so that they can pay the short term liabilities easily by raising funds from current assets.

2. QUICK RATIO
 Quick Assets

Quick Ratio = -----------------------------

Current Liabilities

TABLE 2: QUICK RATIO

Year Quick Assets Current Liabilities Quick Ratio

2011-12 6,703,330,000 4,129,800,000 1.62

2012-13 9,639,940,000 5,761,930,000 1.67

2013-14 9,636,020,000 6,337,030,000 1.52

2014-15 8,577,530,000 5,332,210,000 1.61

2015-16 8,064,330,000 6,293,590,000 1.28

CHART 2: QUICK RATIO

 Quick Ratio

1.8 1.62 1.67 1.61

1.52
1.6
1.28
1.4
1.2
1
Ratio

0.8 Quick Ratio

0.6
0.4
0.2
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The standard ratio of Quick ratio is 1:1 ,Whereas as per above analysis the company is maintaining more than
standard so that they can pay the current liabilities within the Quick assets which are easily converted into cash
within 90 days so that company need not to sell the Capital assets to pay debt

3. CASH RATIO
 Cash + Marketable Securities

Cash Ratio = ---------------------------------------------

Current Liabilities

TABLE 3: CASH RATIO

Year Cash +marketable Current Cash

securities Liabilities Ratio

2011-12 2,283,190,000 4,129,800,000 0.55

2012-13 4,094,680,000 5,761,930,000 0.71

2013-14 2,928,630,000 6,337,030,000 0.46

2014-15 2,199,220,000 5,332,210,000 0.41

2015-16 1,404,260,000 6,293,590,000 0.22

CHART 3: CASH RATIO

 Cash Ratio

0.8 0.71
0.7
0.55
0.6
0.46
0.5 0.41
Ratio

0.4
Cash Ratio
0.3 0.22
0.2
0.1
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The Cash ratio is less than 1 in all 5 years from financial year 2011-12 to 2015-16 this indicate that cash and
cash equivalents are not sufficient to pay the current liabilities

B. LEVERAGE RATIOS

1. DEBT RATIO
 Total Debt

Debt Ratio = -------------------------------------

Total Debt + Net Worth

Total Debt = Secured + Unsecured Loans

Net Worth = Share holders Funds

TABLE 4: DEBT RATIO

Year Total Debt Capital Employed Debt Ratio

2011-12 855,000,000 9,089,690,000 0.09

2012-13 881,000,000 11,479,140,000 0.08

2013-14 857,000,000 14,484,010,000 0.06

2014-15 741,380,000 17,737,090,000 0.04

2015-16 724,720,000 21,741,140,000 0.03

CHART 4: DEBT RATIO

 Debt Ratio
0.09
0.09 0.08
0.08
0.07 0.06
0.06
0.05
Ratio

0.04
0.04 0.03 Debt Ratio
0.03
0.02
0.01
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The debt ratio of company is decreasing year by year it indicates that the company is not more dependent on
debt for capital so that interest burden will be reduced to company

2. DEBT-EQUITY RATIO
 Total Debt

Debt-Equity Ratio = ------------------------

Net Worth

Total Debt = Secured + Unsecured Loans

Net Worth = Share holders Funds

TABLE 5: DEBT-EQUITY RATIO

Year Total Debt Net Worth Debt-Equity Ratio

2011-12 855,000,000 8,234,690,000 0.10

2012-13 881,000,000 10,598,140,000 0.08

2013-14 857,000,000 13,627,010,000 0.06

2014-15 741,380,000 16,995,710,000 0.04

2015-16 724,720,000 21,012,420,000 0.03

CHART 5: DEBT-EQUITY RATIO

 Debt-Equity Ratio
0.1
0.1
0.09 0.08
0.08
0.07 0.06
0.06
Ratio

0.05 0.04
Debt-Equity Ratio
0.04 0.03
0.03
0.02
0.01
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The Debt – Equity Ratio is decreasing from financial year 2011-12 to 2015-16 gradually it means the debt is
reducing year on year when compared to equity the interest rate will be reduced and liability of company will be
reduced and funds can be used for long term
3. INTEREST COVERAGE RATIO

EBIT

Interest Coverage Ratio = -----------------------

Interest

EBIT = Earnings Before Interest and Tax= PBT+ Finance Cost

TABLE 6: INTEREST COVERAGE RATIO

Year EBIT Interest Interest Coverage Ratio

2011-12 3,210,920,000 15,570,000 206.22

2012-13 4,228,150,000 9,980,000 423.66

2013-14 5,373,880,000 7,180,000 748.45

2014-15 6,101,030,000 2,410,000 2531.54

2015-16 7,226,780,000 4,850,000 1490.05

 CHART 6: INTEREST COVERAGE RATIO

Interest Coverage Ratio

3000
2531.54
2500

2000
1490.05
Ratio

1500
Interest
1000 748.45 Coverage
423.66 Ratio
500 206.22

0
2011-12 2012-13 2013-14 2014-15 2015-16

INTERPRETATION

The interest coverage ratio is increasing for 4 consecutive years from 2011-12 to 2014-15 and it decreased in
year 2015-16 it says that first four years the company is in good position in paying interest from its EBIT

4. PROPRIETARY RATIO
 Shareholder’s Funds

Proprietary Ratio = --------------------------------

Total Assets

Shareholder’s Funds = Share Capital + Reserves and Surplus

TABLE 7: PROPRIETARY RATIO

Year Shareholders’ Funds Total Assets Proprietary Ratio

2011-12 8,234,690,000 13,515,170,000 0.60

2012-13 10,598,140,000 17,704,700,000 0.60

2013-14 13,627,010,000 21,394,410,000 0.63

2014-15 16,995,710,000 23,880,840,000 0.71

2015-16 21,012,420,000 29,083,280,000 0.72

CHART 7: PROPRIETARY RATIO

 Proprietary Ratio
0.72
0.71
0.72
0.7
0.68
0.66
0.63
0.64
Ratio

0.62 0.6 0.6 Proprietary Ratio

0.6
0.58
0.56
0.54
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The proprietary ratio is increasing for 5 consecutive years from 2011-12 to 2015-16 it indicates that the
company is increasing the equity share capital for funds when compared to debt capital

C. ACTIVITY RATIOS

1. WORKING CAPITAL TURNOVER RATIO

 Net Sales

Working Capital Turnover Ratio = ---------------------------

Working Capital

Working Capital = Current Assets-Current Liabilities

TABLE 8: WORKING CAPITAL TURNOVER RATIO

Working Capital
Year Net Sales Working Capital
Turnover Ratio

2011-12 23,644,680,000 5,239,700,000 4.51

2012-13 29,589,150,000 6,806,590,000 4.35

2013-14 34,367,590,000 6,649,070,000 5.17

2014-15 42,113,290,000 7,380,350,000 5.71

2015-16 46,906,680,000 7,787,220,000 6.02

CHART 8: WORKING CAPITAL TURNOVER RATIO

 Working Capital Turnover Ratio

7
6.02
5.71
6 5.17
5 4.51 4.35

4
Ratio

2 Working Capital
Turnover Ratio
1

0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Working capital turnover ratio is increasing from year 2012-13 to 2015-16 it indicates that company is properly
utilizing the working capital to increase the sales

2.CURRENT ASSETS TURNOVER RATIO

 Net Sales

Current Assets Turnover Ratio = --------------------------

Current Assets

TABLE 9: CURRENT ASSETS TURNOVER RATIO

Current Assets
Year Net Sales Current Assets
Turnover Ratio

2011-12 23,644,680,000 9,369,500,000 2.52

2012-13 29,589,150,000 12,568,520,000 2.35

2013-14 34,367,590,000 12,986,100,000 2.65

2014-15 42,113,290,000 12,694,580,000 3.31

2015-16 46,906,680,000 14,080,810,000 3.33

CHART 9: CURRENT ASSETS TURNOVER RATIO

 Current Assets Turnover Ratio
3.31 3.33
3.5

3 2.65
2.52
2.35
2.5

2
Ratio

1.5 Current Assets

Turnover Ratio
1

0.5

0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Current asset turnover ratio is increasing from year 2012-13 to 2015-16 it indicates that the company current
assets such as raw materials, cash are using properly to increase the sales of the company and it is a good sign to
company

3. FIXED ASSETS TURNOVER RATIO

 Net Sales

Fixed Assets Turnover Ratio = ------------------------------------

Net Fixed Assets

TABLE 10: FIXED ASSETS TURNOVER RATIO

Year Net Sales Net Fixed Assets Fixed Assets

Turnover Ratio

2011-12 23,644,680,000 3,860,950,000 6.12

2012-13 29,589,150,000 4,618,470,000 6.40

2013-14 34,367,590,000 7,678,640,000 4.47

2014-15 42,113,290,000 10,305,820,000 4.08

2015-16 46,906,680,000 14,362,430,000 3.26

CHART 10: FIXED ASSETS TURNOVER RATIO

 Fixed Assets Turnover Ratio

7 6.4
6.12
6
5 4.47
4.08
4 3.26
Ratio

3
Fixed Assets
2 Turnover
Ratio
1
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Fixed asset turnover ratio is decreasing from year 2012-13 to 2015-16,The standard ratio is 5 times whereas only
in the year2011-12 & 2012-13 the ratio is maintained whereas later the ratio is reduced it indicates that properly
sales are not being generated from the fixed assets in the company

4. TOTAL ASSETS TURNOVER RATION

 Net Sales

Total Assets Turnover Ratio = -------------------------

Average total Assets

TABLE 11: TOTAL ASSETS TURNOVER RATIO

Year Net Sales Average total Total Assets

Assets Turnover Ratio

2011-12 23,644,680,000 12,337,185,000 1.91

2012-13 29,589,150,000 15,609,935,000 1.89

2013-14 34,367,590,000 19,549,555,000 1.75

2014-15 42,113,290,000 22,628,635,000 1.86

2015-16 46,906,680,000 26,473,070,000 1.77

CHART 11: TOTAL ASSETS TURNOVER RATIO

 Total Assets Turnover Ratio

1.95 1.91
1.89
1.9 1.86
1.85
Total Assets
Ratio

1.8 1.77
1.75 Turnover
Ratio
1.75

1.7

1.65
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The standard ratio of total asset turnover ratio is 2 times whereas as per analysis in the company the ratio is less
than 2 times it indicates that there is no proper utilization of total assets in improving sales of company

5. Debtors Turnover Ratio

 Net Sales

Receivables Turnover Ratio = ------------------------------------

Average Receivables

TABLE 12: DEBTORS TURNOVER RATIO

Year Net Sales Average receivables Receivables Turnover

Ratio

2011-12 23,644,680,000 3,126,725,000 7.56

2012-13 29,589,150,000 3,501,800,000 8.45

2013-14 34,367,590,000 4,167,330,000 8.25

2014-15 42,113,290,000 5,034,455,000 8.37

2015-16 46,906,680,000 5,731,240,000 8.18

CHART 12: RECEIVABLES TURNOVER RATIO

 RECEIVABLES TURNOVER RATIO

8.6 8.45
8.37
8.4 8.25
8.18
8.2

8 RECEIVABLES
TURNOVER
Ratio

7.8 RATIO
7.56
7.6

7.4

7.2

7
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The standard ratio of Receivables turnover ratio is 10-12 times whereas as per analysis in the company the ratio
is less than 10-12 times it indicates that there is no proper planning in collection of amount from the debtors &
no proper statement or policy in collection of debts

6.INVENTORY TURNOVER RATIO:

 Cost of Goods Sold

Inventory Turnover Ratio = ----------------------------------

Average Inventory

Cost of Goods Sold = Total Expenses

TABLE 13:Inventory Turnover Ratio

Year Cost of Goods Sold Average Inventory Inventory Turnover

Ratio

2011-12 20,737,940,000 2,756,570,000 7.52

2012-13 25,769,730,000 2,797,350,000 9.21

2013-14 29,416,190,000 3,139,305,000 9.37

2014-15 36,364,870,000 3,765,705,000 9.65

2015-16 40,141,600,000 5,098,905,000 7.87

CHART 13: INVENTORY TURNOVER RATIO

 Inventory Turnover Ratio
9.37 9.65
10 9.21
9 7.87
7.52
8
7
6
Ratio

5
4 Inventory
3 Turnover
Ratio
2
1
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Inventory turnover ratio is increasing from 2011-12 to 2014-15 it indicates that company is properly utilizing
the inventory for increasing the sales of the company

D.PROFITABILITY RATIOS

1. GROSS PROFIT RATIO

 Gross Profit

Gross Profit Ratio = ------------------------------*100

Sales

Gross Profit =Net sale of products-Cost of material consumed-Purchase of stock in trade-Changes in inventory

TABLE 14: GROSS PROFIT RATIO

Year Gross Profit Sales Gross Profit Ratio

2011-12 7,421,470,000 23,644,680,000 31.38

2012-13 9,511,140,000 29,589,150,000 32.14

2013-14 11,202,580,000 34,367,590,000 32.60

2014-15 14,020,390,000 42,113,290,000 33.29

2015-16 11,261,990,000 46,906,680,000 24.00

CHART 14: GROSS PROFIT RATIO

 Gross Profit Ratio
Gross Profit Ratio

32.14 32.6 33.29

31.38

24

2011-12 2012-13 2013-14 2014-15 2015-16

INTERPRETATION

The company gross profit ratio is increasing from year 2011-12 to 2014-15 it indicates that company is properly
generating the profit after paying all its cost of goods sold

2.NET PROFIT RATIO

 Profit After Tax

Net Profit Ratio = ------------------------------------*100

Sales

TABLE 15: NET PROFIT RATIO

Year Net Profit Sales Net Profit Ratio

2011-12 2,151,000,000 23,644,680,000 9.09

2012-13 2,867,050,000 29,589,150,000 9.68

2013-14 3,674,360,000 34,367,590,000 10.69

2014-15 4,108,620,000 42,113,290,000 9.75

2015-16 4,894,450,000 46,906,680,000 10.43

CHART 15: NET PROFIT RATIO

 Net Profit Ratio

11 10.69
10.43
10.5

10 9.68 9.75
Ratio

9.5 9.09 Net Profit Ratio

9

8.5

8
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The net profit ratio is increasing from year 2011-12 to 2013-14 & in year 2015-16 the ratio is in 10.43 it
indicates that company is in good position in converting the sales into profit in a efficient manner

2.RETURN ON INVESTMENT

Classified into three types

a) Return on Assets
b) Return on capital employed
c) Return on Equity

Net Profit After Interest & Tax

Return on Assets = ---------------------------------------------

Average total Assets

TABLE 16.1: RETURN ON ASSETS

Net Profit After Average Total

Year Return on Assets
Interest & Tax Assets

2011-12 2,151,000,000 0.17

12,337,185,000

2012-13 2,867,050,000 0.18

15,609,935,000

2013-14 3,674,360,000 0.18

19,549,555,000

2014-15 4,108,620,000 0.18

22,628,635,000

2015-16 4,894,450,000 0.18

26,473,070,000

CHART 16.1: RETURN ON ASSETS

 Return on Assets
0.18 0.18 0.18 0.18
0.18
0.178
0.176
0.174
Ratio

0.172 0.17
0.17
0.168 Return on
Assets
0.166
0.164
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Return on assets indicates that company is earning nearly 0.18 rupee net profit from the total assets invested in
the company

EBIT

Return on Capital Employed = --------------------------------------------- * 100

Capital Employed
 TABLE 16.2: RETURN ON CAPITAL EMPLOYED

Return on Capital
Year EBIT Capital Employed
Employed

2011-12 3,210,920,000 35.32

9,089,690,000

2012-13 4,228,150,000 36.83

11,479,140,000

2013-14 5,373,880,000 37.10

14,484,010,000

2014-15 6,101,030,000 34.40

17,737,090,000

2015-16 7,226,780,000 33.24

21,741,140,000

CHART 16.2: RETURN ON Capital Employed

 Return on Capital Employed

38 37.1
36.83
37
36 35.32

35 34.4
Ratio

34 33.24
33 Return on
Capital
32 Employed
31
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The company earnings from capital employed have been reduced from 2013-14 to 2015-16 it indicates that

company is not properly utilizing its capital employed in bussines

 Net Profit after Taxes

Return on Equity = --------------------------------------------- * 100

Share holders funds

TABLE 16.3: RETURN ON CAPITAL EQUITY

Year Net Profit after taxes Share holders funds Return on Equity

2011-12 2,151,000,000 26.12

8,234,690,000

2012-13 2,867,050,000 27.05

10,598,140,000

2013-14 3,674,360,000 26.96

13,627,010,000

2014-15 4,108,620,000 24.17

16,995,710,000

2015-16 4,894,450,000 23.29

21,012,420,000

CHART 16.3: RETURN ON EQUITY

 Return on Equity

28 27.05 26.96
27 26.12
26
25 24.17
Ratio

24 23.29

23 Return on
Equity
22
21
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

Return on equity ratio indicates how many profit can be generated from equity funds whereas as per analysis the
ratio is reducing from year 2013-14 to 2015-16 so investors will not be interested in investing in equity shares
4. EARNING PER SHARE

Profit After Tax

Earning Per Share = --------------------------------------

Number of Equity Shares

TABLE 17: EARNING PER SHARE

Year Profit After Tax Number of Shares Earning Per Share

2011-12 2,151,000,000 85,424,941 25.18

2012-13 2,867,050,000 170,812,500 16.78

2013-14 3,674,360,000 170,812,500 21.51

2014-15 4,108,620,000 170,812,500 24.05

2015-16 4,894,450,000 170,812,500 28.65

 CHART 17: EARNING PER SHARE

Earning Per Share

28.65
30
25.18
24.05
25 21.51

20 16.78
Ratio

15
Earning Per
10 Share

0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The Earnings per share is increasing from year 2012-13 to 2015-16 it indicates that company is generating more
profits available for share holders after paying all the expenses
5. DIVIDEND PER SHARE

Dividend

Dividend Per Share = ----------------------------------

Number of Shares

TABLE 18: DIVIDEND PER SHARE

Year Dividend Number of Shares Dividend Per

Share

2011-12 323,000,000 85,424,941 3.78

2012-13 430,000,000 170,812,500 2.52

2013-14 552,000,000 170,812,500 3.23

2014-15 617,000,000 170,812,500 3.61

2015-16 726,000,000 170,812,500 4.25

CHART 18: DIVIDEND PER SHARE

 Dividend Per Share
4.25
4.5
3.78
4 3.61
3.23
3.5
3 2.52
2.5
Ratio

2
1.5 Dividend
Per Share
1
0.5
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The dividend per share is increasing from year 2012-13 to 2015-16 so investors will be interested in investing in
the company and so company is more concentrating on equity than debt
6. DIVIDENDPAYOUT RATIO

Dividend Per Share

Dividend Payout Ratio = ----------------------------------

Earning Per Share

TABLE 19: DIVIDENDPAYOUT RATIO

Dividend
Year Dividend Per Share Earnings Per Share
Payout Ratio

2011-12 3.78 25.18 0.15

2012-13 2.52 16.78 0.15

2013-14 3.23 21.51 0.15

2014-15 3.61 24.05 0.15

2015-16 4.25 28.65 0.15

CHART 19: DIVIDENDPAYOUT RATIO

 Dividend Payout Ratio
0.15 0.15 0.15 0.15 0.15
0.16
0.14
0.12
0.1
Ratio

0.08
0.06 Dividend
0.04 Payout
Ratio
0.02
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

INTERPRETATION

The dividend payout ratio is equal for all years it indicates that company is paying 15% from the earnings per
share of company every year it indicates company is maintain standard

FINDINGS

 Cash reserve ratio is less than standard

  Equity capital is given more preference
 Debt capital is given less priority
 Fixed asset turnover ratio is not as per standards from 2013-14
 Total asset turnover ratio is not as per standards
 Debtors Turnover ratio is not as per standards
 Inventory ratio is reduced in year 2015-16
 Gross Profit reduced in year 2015-16
 Activity ratios have been reduced in 2012-13 when compared to all years

SUGGESTIONS

 Cash & Cash equivalents of company should be maintained by company in 1:1 ratio so that they can
repay the Current liabilities easily
  Equity and debt capital should be given preference in 2:1 ratio so that company can enjoy the tax
benefits from interest and dilution of ownership will take place if more equity capital is given priority
 Fixed asset turnover ratio is not as per standards so proper utilization of funds should be done in fixed
assets
 Total asset ratio is also not as per standards in recent years so care should be taken in investing of assets
so that proper revenue can be generated from that investment
 Debtor turnover ratio should be managed properly the credit policy which is providing by the company
to their customers should be changed so that proper standard can be maintained

CONCLUSION

The Overall performance of company is good but it should follow some standard ratios as per norms and it has a
good production process when compared to other batteries manufacturing company with latest technology from
Johnson Controls Inc